What's going on here?
Shares of American coffee chain Starbucks slipped by almost 5% on Friday as the company reported another less-than-Grande quarter – suggesting that it could do with giving its turnaround another shot.
What does this mean?
Starbucks’ business has been struggling of late as people make more and more coffee at home and the rise of the independent coffee store takes a sip out of Starbucks’ market share.
The downward trend continued as Starbucks released weaker-than-expected quarterly results on Friday – somewhat worrying, as the holidays are usually a blockbuster season for the company (Pumpkin Spice Latte, anyone?). It also warned that global sales growth in 2018 would be at the low end of its previous forecast, although Starbucks’ CEO did point to strong sales growth in China – 6% in the most recent quarter – as a sign the country represents the long-term growth opportunity for the company.
Why should I care?
For you personally: You are crucial to Starbucks’ future.
Millennials are becoming more and more important as a customer base, and while it’s true that they’re pushing for fresh, organic food at the supermarket, they’re also much more likely to spend money on eating out than previous generations – which is good in the long run for places like Starbucks. And if you’re living in America, you might be tempted to take advantage of mildly quickening wage growth and spend your bigger paycheck at, say, the house of the two-tailed siren…
The bigger picture: Starbucks, among others, has learned to build brand loyalty through digital. (tweet this)
Starbucks says it plans to better use mobile in-app ordering and digital marketing to increase customer loyalty, as customers who use its digitally oriented Starbucks Rewards loyalty program tend to spend more at the store. Other programs – like Walgreens’ Balance Rewards and Amazon’s Prime – have also worked to build brand loyalty, not only through cost savings but also through personalized content that builds a tighter bond between consumer and company.